New Labour leader chosen

Event

David Cunliffe was elected on September 15th as the leader of New Zealand's Labour Party, the principal opposition party to the current centre-right government.

Analysis

Although Mr Cunliffe's win is a boost for both him and the Labour party, he had first-preference support from only one-third of his fellow Labour members of parliament (MPs), as he is believed to be strongly disliked by many of his caucus colleagues. The contest was held under Labour's new rules, in which party members hold 40% of the vote, MPs 40% and six affiliated unions the remaining 20%. Previously, the party leader had been elected by MPs alone.

The election contest followed the resignation in August of the previous leader, David Shearer, which triggered a contest between Mr Cunliffe and his fellow MPs, Grant Robertson and Shane Jones. Mr Jones—widely seen as being on the right of the party—received the votes of just seven out of Labour's 34 MPs, and relatively little support from party members and the unions. Mr Robertson had the most support among MPs, with 16 votes, but just 27% of members' votes. In contrast, Mr Cunliffe was supported by just 11 MPs, but won 60% of members' votes and 70% of the union vote.

The new Labour party leader, who has business experience and an MBA from Harvard University, was previously regarded as being on the right of the party. However, he made promises during the contest that have been seen as a significant shift to the left. For example, he promised an increase to the minimum wage of NZ$15 (US$12) per hour, up from its current NZ$13.75 per hour, and to introduce a "living wage" of NZ$18 per hour for all government staff. He has also given speeches indicating that Labour needs to break decisively with both neo-liberal ideas and the "Third Way" approach that characterised the last Labour government from 1999 to 2008, which emphasised a return to social democracy.

Mr Cunliffe is widely predicted to be a stronger and more articulate leader than his predecessor. However, the Labour Party has been weakened recently by in-fighting, and Mr Cunliffe's poor relationships with colleagues will remain a problem for the party unless discipline is imposed.

Impact on the forecast

We retain our forecast that the National Party-led coalition government will remain in place until the next general election, but the election of Mr Cunliffe supports our view that the chances of John Key, the prime minister, being re-elected are less and less certain.